Universities: Nao Warns Cuts Pose Bankruptcy Risk

[interestrateripoff]

http://www.bbc.co.uk/news/education-12636185

More universities in England could be put at risk of bankruptcy as a result of cuts and changes to funding, the National Audit Office (NAO) has warned.

A report from the financial watchdog says some universities will benefit from the changes but some will have less money.

It says the public might need to be told more about universities at risk.

Universities minister David Willetts says the changes will increase universities' cash funding by 2014.

Grants cut

The NAO report says the sector has seen "strong growth in its income" in recent years.

But it says: "The new funding framework, coupled with the squeeze in public funding, is likely to increase the level of risk within the sector.

"While there are a number of financially strong institutions, there is wide variation in institutions' financial performance."

It notes: "The transition and the new environment itself will increase the risk within the sector, potentially raising the number of institutions at high risk of failing".

Teaching grants to universities are being cut and universities will be expected to fund their courses from higher tuition fees, which are being raised in 2012 from just over £3,000 a year to a maximum of £9,000.

I wonder how many Universities will end up failing?

[bogbrush]

Translation:

Organisation which don't provide something that people are prepared to pay for could go broke.

In a stunning development, it emerged that Universities which have been able to sell courses to people who get someone else to pay for them, may find it harder to persuade the same people to buy them themselves.

This could lead to Universities having to design courses that are sufficiently useful to the user to warrant the price. As many of them are completely pointless it is feared that this change will be beyond them and many will go to the wall.

---------------------------------------------------

This is great news for the development of a useful further education system, and is likely to lead to millions of young people not taking on loads of debt for valueless degrees.

[leicestersq]

http://www.bbc.co.uk/news/education-12636185

I wonder how many Universities will end up failing?

There is a cunning plan to avoid failure through bankruptcy. It is called not spending what you dont have.

Alas, there are many Universities that are not familiar with this simple strategy.

[spyguy]

Assumption is that Thames Valley and London Met are going.

Leeds Met too, thanks to the Imelda Marcos-like VC.

What are the others?

Glouster Uni (yes, I to look that up too)?

Bath Spa?

Bournemouth?

[The Ayatollah Buggeri]

Assumption is that Thames Valley and London Met are going.

Leeds Met too, thanks to the Imelda Marcos-like VC.

What are the others?

Glouster Uni (yes, I to look that up too)?

Bath Spa?

Bournemouth?

Apparently HEFCE has a secret 'at risk' list of nine institutions, which it refuses to publish in case this prejudices recruitment.

Thames Valley, London Met and Leeds Met are almost universally believed to be on it. I've also heard rumours, via someone towards the top end of middle management in my institution (Univ. of Leeds) that Bolton, Cumbria, Luton, Glendower, Dundee Abertay and Southampton Solent are also believed to be in significant trouble. I haven't heard anything about Gloucester, Bath or Bournemouth.

Leeds Met is technically insolvent and is only being kept alive by emergency HEFCE cash. If recruitment falls significantly, pulling the plug has to be on the agenda. Our V-C was sufficiently worried about this to make a speech last year in which he said that a merger was absolutely not going to happen under any circumstances; which I presume means that he doesn't believe that much if any of the Met is worth saving. However, I wouldn't be surprised if he comes under a lot of political pressure to take the place over, à la Santander / Bradford and Bingley. He's in quite a strong position, though - HEFCE and research council (i.e. taxpayers') funding only accounts for around a third of our income overall, so it's not as if funding threats mean the same thing as they would if we were a post-92.

[interestrateripoff]

Apparently HEFCE has a secret 'at risk' list of nine institutions, which it refuses to publish in case this prejudices recruitment.

Thames Valley, London Met and Leeds Met are almost universally believed to be on it. I've also heard rumours, via someone towards the top end of middle management in my institution (Univ. of Leeds) that Bolton, Cumbria, Luton, Glendower, Dundee Abertay and Southampton Solent are also believed to be in significant trouble. I haven't heard anything about Gloucester, Bath or Bournemouth.

Leeds Met is technically insolvent and is only being kept alive by emergency HEFCE cash. If recruitment falls significantly, pulling the plug has to be on the agenda. Our V-C was sufficiently worried about this to make a speech last year in which he said that a merger was absolutely not going to happen under any circumstances; which I presume means that he doesn't believe that much if any of the Met is worth saving. However, I wouldn't be surprised if he comes under a lot of political pressure to take the place over, à la Santander / Bradford and Bingley. He's in quite a strong position, though - HEFCE and research council (i.e. taxpayers') funding only accounts for around a third of our income overall, so it's not as if funding threats mean the same thing as they would if we were a post-92.

I'd have thought you'd have gone with Llodys HBoS merger?

No doubt huge promises will be made to Leeds Uni to take over the mess at the Met.

[interestrateripoff]

There is a cunning plan to avoid failure through bankruptcy. It is called not spending what you dont have.

Alas, there are many Universities that are not familiar with this simple strategy.

What you fail to grasp is the trougher mentality. If your a VC you need to justify your salary, a small budget means a smallish wage, the best way to boost the budget you are managing is to borrow loads of cash for "investment" you've then increased your budget and deservedly increase your salary. Hopefully you won't stay in this position so the long term sustainability of said policy won't affect you.

[Surf's Up]

It's not that long ago they put up road signs in Reading to TVU, which everyone I know still refers to as Reading Tech.

[leicestersq]

What you fail to grasp is the trougher mentality. If your a VC you need to justify your salary, a small budget means a smallish wage, the best way to boost the budget you are managing is to borrow loads of cash for "investment" you've then increased your budget and deservedly increase your salary. Hopefully you won't stay in this position so the long term sustainability of said policy won't affect you.

Exactly. So much easier to do when you have access to public money. If you fail politicians get the blame, so they give you more money so you dont fail.

[Hyperduck Quack Quack]

Oxford and Cambridge have already set themselves on a course towards decline of standards. By charging the £9000 fees, they'll end up with just students with rich parents - the £9,000 per year fees being the new entry requirement instead of 3 grade A's at A level. I mean what if they find they make more money taking less bright rich kids than geniuses from poorer backgrounds.

[leicestersq]

Oxford and Cambridge have already set themselves on a course towards decline of standards. By charging the £9000 fees, they'll end up with just students with rich parents - the £9,000 per year fees being the new entry requirement instead of 3 grade A's at A level. I mean what if they find they make more money taking less bright rich kids than geniuses from poorer backgrounds.

Its all about the mix. You need the best students to enhance your reputation. Someone though, needs to pay the bills.

Dont they give scholarships and the like for really bright but poor ones? Expect to see more of this.

[erranta]

Oxford and Cambridge have already set themselves on a course towards decline of standards. By charging the £9000 fees, they'll end up with just students with rich parents - the £9,000 per year fees being the new entry requirement instead of 3 grade A's at A level. I mean what if they find they make more money taking less bright rich kids than geniuses from poorer backgrounds.

Oxford + Cambridge own tens of thousands of acres of land

Cambourne the new-town is built on Cambridge University land - like all the Science Parks were. They must have got Billions from selling it.

They deliberately withhold land for housing development (by holding Camb Council up by the goolies) to force up house prices so they get more and more for their monopolised land when any tidbits are thrown out for plebs to build on.

The Cambridge Mafia at their worst - prob. confirmable 'ditto' by someone who knows Oxford pretty well.

[wonderpup]

This is great news for the development of a useful further education system, and is likely to lead to millions of young people not taking on loads of debt for valueless degrees.

Not really- by effectively putting the design and content of the curriculum into the hands of the 'consumer' you are likely to end up with an increase in degrees in subjects that appeal to the demographic in question- late teens.

So we can expect in the future even more 'media studies' style degrees to be offered as increasingly desperate institutions play out a juvenile version of free market dynamics and pander to the youthful aspirations of their customer base.

[MrPin]

Not really- by effectively putting the design and content of the curriculum into the hands of the 'consumer' you are likely to end up with an increase in degrees in subjects that appeal to the demographic in question- late teens.

So we can expect in the future even more 'media studies' style degrees to be offered as increasingly desperate institutions play out a juvenile version of free market dynamics and pander to the youthful aspirations of their customer base.

You are dangerously right!

[TheCountOfNowhere]

better them than us!!!!!!

[Will!]

Oxford and Cambridge have already set themselves on a course towards decline of standards. By charging the £9000 fees, they'll end up with just students with rich parents - the £9,000 per year fees being the new entry requirement instead of 3 grade A's at A level. I mean what if they find they make more money taking less bright rich kids than geniuses from poorer backgrounds.

Cambridge isn't a homogenous whole. It's broken down into colleges, some of which (e.g Trinity) spend a lot of money on bursaries for those geniuses from poorer backgrounds, while others are just glorified finishing schools for thick rich kids.

[Timak]

Oxford + Cambridge own tens of thousands of acres of land

Cambourne the new-town is built on Cambridge University land - like all the Science Parks were. They must have got Billions from selling it.

They deliberately withhold land for housing development (by holding Camb Council up by the goolies) to force up house prices so they get more and more for their monopolised land when any tidbits are thrown out for plebs to build on.

The Cambridge Mafia at their worst - prob. confirmable 'ditto' by someone who knows Oxford pretty well.

Not entierly true, some of it was also built on the council leaders family farm - all above board I assure you.

[aussieboy]

Translation:

Organisation which don't provide something that people are prepared to pay for could go broke.

In a stunning development, it emerged that Universities which have been able to sell courses to people who get someone else to pay for them, may find it harder to persuade the same people to buy them themselves.

This could lead to Universities having to design courses that are sufficiently useful to the user to warrant the price. As many of them are completely pointless it is feared that this change will be beyond them and many will go to the wall.

---------------------------------------------------

This is great news for the development of a useful further education system, and is likely to lead to millions of young people not taking on loads of debt for valueless degrees.

That's a bit of a simplistic view.

People tend not to value things that provide benefits only in the medium and long run. In the same way that long term harms are ignored (case in point, smoking), the young have a tendency toward catastrophic discounting which is why third party funding (eg government) makes sense.

Same with assets generating positive externalities.

[aussieboy]

Cambridge isn't a homogenous whole. It's broken down into colleges, some of which (e.g Trinity) spend a lot of money on bursaries for those geniuses from poorer backgrounds, while others are just glorified finishing schools for thick rich kids.

I remember being told you could walk from Cambridge to London on St John's college land.

[maffo in oxford]

The Cambridge Mafia at their worst - prob. confirmable 'ditto' by someone who knows Oxford pretty well.

Yep, a lot of the tennant farms around Oxfordshire are owned by the universities too. Beside hundreds of houses let to students & owning the land tha various business parks were built on etc.

[bogbrush]

That's a bit of a simplistic view.

People tend not to value things that provide benefits only in the medium and long run. In the same way that long term harms are ignored (case in point, smoking), the young have a tendency toward catastrophic discounting which is why third party funding (eg government) makes sense.

Same with assets generating positive externalities.

Let's just say you're right (I don't necessarily agree but let's go with it). If so, then by providing a short term benefit (not having to work, great social life, etc.) without cost the young person will make decisions with negative long term benefits by taking cr@p degrees. Even so, a large loan IS a long term pain and a short term nothing, so tuition fees wouldn't be a problem.

But it's moot as I don't agree with you; I see plenty of examples of kids making mature decisions.

[aussieboy]

Let's just say you're right (I don't necessarily agree but let's go with it). If so, then by providing a short term benefit (not having to work, great social life, etc.) without cost the young person will make decisions with negative long term benefits by taking cr@p degrees. Even so, a large loan IS a long term pain and a short term nothing, so tuition fees wouldn't be a problem.

But it's moot as I don't agree with you; I see plenty of examples of kids making mature decisions.

The point isn't moot - catastrophic discounting is well proven across populations: there'll always be examples due to it being a population-wide phenomenon.

It does, as you point out, work both ways which makes it a very blunt tool to use to weed out valueless degree courses... particularly when big tuition fees cause one group of individuals with a large discount rate (those from poor families) making a different decision from another group with a lower discount rate (those with cash in the bank) irrespective of the course or their potential.

[Optobear]

I remember being told you could walk from Cambridge to London on St John's college land.

My understanding was that it required land belonging to both St John's Oxford and St John's Cambridge. Despite being a graduate of one of those institutions I can't work out if that should be written as St John's Colleges' land or St Johns' Colleges' land.

[bogbrush]

The point isn't moot - catastrophic discounting is well proven across populations: there'll always be examples due to it being a population-wide phenomenon.

It does, as you point out, work both ways which makes it a very blunt tool to use to weed out valueless degree courses... particularly when big tuition fees cause one group of individuals with a large discount rate (those from poor families) making a different decision from another group with a lower discount rate (those with cash in the bank) irrespective of the course or their potential.

The scenario you describe doesn't apply when the fees are paid by (potentially) infintely deferred loans.

[Frank Hovis]

Apparently HEFCE has a secret 'at risk' list of nine institutions, which it refuses to publish in case this prejudices recruitment.

Isn't that the UCL report that was linked from here? Four most at risk Edge Hill, Norwich College of Art, Bishop Grossteste London and something in Nottingham IIRC.